Texas Statewide Franchise a Grande Idea

Grande Communications Networks Inc., an established overbuilder, this week took advantage of an exception in a new Texas law that allows current cable competitors with low penetration to rescind their local contracts in favor of statewide licensing.

A new Texas telecommunications-competition law does not let incumbents like Time Warner Cable or Charter Communications Inc. apply for a statewide operating authority. The law does, however, include exceptions for nonincumbent operators that serve fewer than 40% of cable homes within their municipal franchises. That exception allows Grande to apply for the state license.

Grande has 49 local franchises, including the cities of Austin, Corpus Christi, San Antonio and Waco and parts of five counties.

Grande, a bundled-services provider that has been serving the state since 2000, has 131,538 total customers. Of those, 85,440 take video services.

Martha Smiley, executive vice president of corporate policy and services for Grande, said the operator would continue to pay cities franchise fees, but it could operate in the future without the onerous burden of performance bonds, letters of credit and in-kind payments. Those local requirements are set at levels comparable to those paid by incumbent cable operators.

Grande will pay fees, but they will be commensurate with its own level of penetration, she added.

Verizon Communications Inc. filed its state application late last week, but executives stated in that application that the telephone company will not rescind local franchises it has already negotiated. Verizon launched in Keller Sept. 22, and it will launch in locally franchised Wylie and Sachse by the end of 2005, according to spokesman Bill Kula.

Guadalupe Valley Communications Systems LP, a co-op in the hill country near San Antonio, has become the first telecommunications company actually granted a statewide cable franchise for Texas. The PUC granted its franchise request Oct. 3

Guadalupe is a 54-year-old telephone co-op that also provides Internet services. It has 30,000 customers. Executives did not return calls on deadline to detail the company's cable plans.